Indian pharmaceutical companies are benefiting from a rise in vector-borne diseases. Domestic revenues rose 9.4% last month, primarily driven by the malaria and anti-infective segments.
Monsoon-related illnesses drove up the sales of anti-infective drugs. Sales of anti-infective drugs grew 11.3% in value terms, points out Motilal Oswal Financial Services Ltd. This was followed by sales of vitamins, minerals, nutrients and pain relief drugs.
But leave aside malaria and anti-infective segments, which are more of a seasonal phenomenon, and the sales trends are not particularly encouraging.
There was a moderation in sales of most therapies last month compared to July, when total pharmaceutical sales in India accelerated 13% in value terms. “Chronic segments like oncology, cardiovascular, nervous system, dermatology saw single-digit growth," Jefferies India Pvt Ltd said in a note.
The moderation in sales impacted industry volumes. Total volume growth slowed to 1.1% in August from 4.5% in July. Six of the top 20 companies saw a year-on-year decline in volumes, Jefferies points out. “The moderation in growth was across companies, with only Novartis and Alkem Laboratories seeing improvement in growth. Nine of the 20 companies saw single-digit growth versus just one in July," the broker added.
Sales can be lumpy on a monthly basis. But there is no denying the fact that the industry volume growth dropped to low single digits this year compared to mid-single digit growth in much of the last year (2018).
The volume trends imply a subdued demand environment. This comes in the backdrop of growing prevalence of generic drugs in the country, which are getting a renewed push from the government. While the impact right now is said to be marginal, there is also a fear that the government’s generic drug push can weigh on branded drug sales.
In the near term, it is crucial the slowdown in chronic therapies does not last long. The impact (of the continued slowdown in chronic therapies) will be more pronounced on the industry sales as the benefit of the seasonal spurt in anti-infective drug revenues fades.